The Tadawul All-Share Index (TASI) closed below the 6,000-point mark at 5,931.29, dragged down by the petrochemical sector which lost 3.82 percent to 5,927.94 points.
Earlier, the Tadawul index opened 3 percent lower at 5,913 points with losses in all sectors.
Over SR2.71 billion worth of shares changed hands Saturday.
“The sell-off in world stocks last week and severe volatility in the international markets due to the downgrade of the US economy and expanding European debt crisis besides economic situations in many parts of the world becoming more uncertain all have influenced the Saudi stock market, which generally follows global market trends,” Said Al-Shaikh, senior vice president and group chief economist at the National Commercial Bank, said.
“Not only were investors concerned by the economic data coming from the euro zone, but the recent meeting between German and French leaders to address the fiscal challenges in Europe failed to ease worries about the debt crises. This lack of confidence in the ability of European leaders created a renewed cycle of volatility in the European stock markets, which is affecting the Saudi stock market as well,” Al-Shaikh said.
Basil M. Al-Ghalayini, chairman and CEO of BMG Financial Advisors, said it seems Saturday’s decline came as a reaction to the steep fall which hit the major financial markets last Thursday post the release of different reports indicating a slower global and US growth.
“Obviously, our market is receptive to the international markets irrespective of the strong local economic indicators. With the Saudi market witnessing the biggest growth pattern in its history with over $400 billion chasing projects in different sectors over the next five years, the local stock market should be performing better than its current level,” Al-Ghalayini added.
On Tadawul's fall, Faisal Alsayrafi, a financial adviser, said the Saudi market is reacting to negative signals coming from Europe about the debt crisis and the fall in global equities which have an indirect impact on Saudi stocks. "The fall in the Saudi stock market was expected on Saturday due to the global stock market rout which happened for the last couple of days and mounting fears about global economic recovery," Alsayrafi said.
Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: “The renewed market turbulence in Saudi Arabia highlights the persistent sensitivity of the national market to global concerns. Even though the Saudi economy can be expected to be very resilient in the face of a severe global crisis thanks to its strong fundamentals and large reserves, external shocks have persistently exerted a pronounced negative effect throughout the global crisis. This is partly due to the heavily retail investor-driven nature of the regional markets in the GCC.”
